The Hedgehog (Hh) family of secreted signaling proteins plays fundamental roles in the patterning of ventral neuronal cell types of the brain and spinal cord, limb, and many other structures. Loss of or decrease in the Hh signaling pathway activity results in severe developmental birth defects, whereas inappropriate activation of the Hh signaling pathway is also associated with several common types of human cancer including basal cell carcinoma and medulloblastoma. A thorough understanding of this pathway is crucial for prevention or remedy of the abnormalities resulting from defective or unregulated Hh pathway activation. In vertebrates, Hh signal is mediated by three members of the Gli/Ci family of transcription factors: Glil, Gli2, and Gli3. Genetic analysis has underlined the biological roles of each of the three genes. Glil is a Hh target and a strong transcriptional activator but not essential for the Hh signal transduction in the mouse. Gli2, acting positively, is absolutely required for mediating Hh signal. Gli3 mainly plays a negative role in the pathway. Consistent with this, the majority of Gli3 protein is processed in the absence of Hh signal. In contrast to Gli3, little is known about how the activity of Gli2 protein is regulated at the molecular level. The objective of this application is to understand the molecular mechanism by which Gli2 is regulated. Our preliminary studies have provided the evidence that although Gli2 and Gli3 are phosphorylated similarly by PKA, CKI and GSK3, unlike Gli3, Gli2 undergoes degradation instead processing. The degradation of Gli2 is likely mediated by the ubiquitin and proteasome system through B-TrCP. This application focuses on three aims. 1) Elucidate the molecular mechanism of Gli2 degradation; 2) Determine the role of Shh signaling in the regulation of Gli2 stability and the significance of Gli2 phosphorylation and degradation; and 3) Understand the molecular basis of the distinct fate of Gli2 and Gli3 proteins. The completion of the proposed study will significantly advance our understanding of the molecular mechanism of how Gli2 transcription factor is regulated and how it may mediate Shh signal. It may also give us insight into the understanding of molecular mechanism of human birth defects and cancer associated with abnormal Shh signaling. In addition, it may reveal a novel mechanism by which Beta-TrCP regulates Gli2 degradation and possibly Gli3 processing.